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The ethics balancing act Got board hassles?

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A note from the editor

This issue of BoardRoom is dedicated to Ethics and Culture – one of our What Matters themes for the year. The Agenda Directors need to be ethical leaders JUNE / JULY 2018 and set the tone at the organisations they work with. Board members have key roles when it comes to shaping INSIDE IoD strategy, and also how that strategy is carried out and the behaviour that BoardRoom details is expected from employees. Professor 01 Karin Lasthuizen, a Dutch academic 13 02 CEO letter currently in New Zealand as the Brian Picot Chair in Ethical Management at 03 UpFront Victoria University of Wellington, says ethics need to be part of an ongoing 29 GLC update discussion that informs decisions made throughout an organisation. 39 Events We also take a look at what goes into shaping a workplace culture. It’s not a 41 Out and about straightforward area of business, and will ROB FYFE / differ from organisation to organisation, What questions should so how can a board influence or contribute your board be asking FEATURES to a company’s culture? about your supply chains? 09 How can boards help Supply chains have been in the shape corporate culture? headlines in the past couple of months, highlighting the importance of knowing 13 Rob Fyfe talks modern where your products come from and human slavery how vital it is that you are upfront 16 with stakeholders about it. MBIE has 16 Ethical supply chains contributed a piece on supply chains and modern slavery and modern human slavery and what New Zealand businesses need to be aware 19 Ethical leadership of. We also talk to Rob Fyfe about the work he has been doing in this space and his 27 Generational diversity belief that human trafficking and modern in the boardroom day slavery are much more widespread than people realise. 32 Updated guide on CPD points The IoD has also recently updated MODERN SLAVERY AND its CPD guide, outlining the different ETHICAL SUPPLY CHAINS / ways you can gain CPD points and giving Putting the spotlight FROM OUR PARTNERS guidance on how to allocate points. We on business practices. speak to some IoD members about the 25 Results from Marsh’s way they approach CPD, and hope it Global Risk Survey / might inspire you in your professional Marsh development journey. 35 Reading company ethics 19 from the boardroom / Kate Geenty BoardRoom editor KPMG 37 The importance of insurance for statutory liability / NZI

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BOARDROOM June/July 2018 BOARDROOM 1 CEO LETTER

KIRSTEN PATTERSON CEO, INSTITUTE OF DIRECTORS

practice, human rights in How will autonomous vehicles business, and transparency change that conversation, How ethical in the supply chain has more and test our ethics when we and more boards conducting have to sign waivers and user site visits and factory tours agreements that hand over is our conduct? of offshore production sites. authority for life and death It’s not just ‘fast fashion’ decision making? How do industries under the spotlight we as directors govern in Tēnā koutou katoa, around data and privacy. as contracting processes and an environment where our Technology is developing power imbalances are under programmers and products A lawyer writing about at such a rapid rate that greater scrutiny. will be making these types ethics (even a now reformed legislators and regulators are Directors also need to of higher level decisions? inactive one) is often seen having difficulty keeping up prepare their organisations How do we respond to as the opening line of a and preserving privacy as for the debates around individual customer pressure joke or cartoon. No longer a human right. automation and machine wanting exemptions from is the test of whether it is But it is clear from the learning. The ethical dilemmas inbuilt community protections? ‘legal’ or ‘allowed’ sufficient recent examples of Facebook and pending decision points To whom do we owe a duty to determine whether our and Cambridge Analytica around autonomous vehicles of care? business models are ethical. being summoned to appear are a good example of the As McKinsey’s Marvin We are, and we should be, before an EU Parliamentary power of the decisions Bower, whom Harvard referred being held to a higher standard Committee and the US Senate machines will make in future. as the father of modern from consumers, shareholders that ethical debates are not At a superficial level we all management consultancy, and stakeholders than just something we can afford to understand that should the said: “There is no such thing what the statutory minimum ignore in the boardroom. car have to choose between as business ethics. There floors prohibit or protect. Closer to home, in Australia, hitting and likely killing one is only one kind – you have Social media is also driving the banking enquiry has the person versus a dog, or one to adhere to the highest and demanding transparency role of the board in ethics and person versus a group of standards.” and accountability in our culture front page. There is school children, it will choose Thank you for choosing ethical conduct in ways not much to be learnt and there the smaller collateral damage to commit yourself to high seen before. Industries once are likely to be salient lessons in pursuit of the greater good. standards and the IoD Code seen as ‘blue chip’ no longer for other industries as the But how comfortable are of Practice for Directors. pass the ethical investment enquiry continues to play out we with ethical decisions being New Zealand has never test, and many are seen as over the coming months. hard-wired into the algorithms needed IoD members more. sunset. Directorships of Here in New Zealand, to which we are handing Haere taka mua, taka muri; tobacco giants are no longer potential legislation and social over our car keys? Are we kaua e whai. Be a leader, not celebrated on LinkedIn. changes, such as legalising discussing the issue of what a follower. Corporations such as Walmart cannabis and euthanasia, happens when our car decides Ngā mihi, are redefining their sales could create new challenges that we and our families are boundaries following calls for the directors of tomorrow. the acceptable collateral Kirsten (KP) for gun reform in the US. Where before we might damage in the car’s accident Digital disruption is also only see directors out of the assessment? increasing the speed in boardroom for health and Currently we get to exercise which boards are facing and safety site visits, the growing our ethics as drivers against navigating ethical issues emphasis on good ethical a backdrop of ‘self-defence’.

BOARDROOM June/July 2018 BOARDROOM 2 UPFRONT UpFront The Queen’s Birthday Honours List 2018

The Institute of Directors congratulates the following members who were all honoured in the Queen’s Birthday Honours List.

DNZM ONZM QSO DAME COMPANION OF THE NZ ORDER OFFICER OF THE NZ ORDER OF MERIT THE QUEEN’S SERVICE ORDER OF MERIT

Mr Richard James Jeffery Dr Paul Hugh Stewart Reynolds The Honourable Luamanuvao Takapau Gisborne Winifred Alexandra Laban, QSO For services to governance For services to the State. Lower Hutt and the community. For services to education QSM and the Pacific community. Ms Caren Jane Rangi THE QUEEN’S SERVICE MEDAL Napier For services to the Pacific CNZM COMPANION OF THE NZ ORDER OF MERIT community and governance. Ms Martine Abel-Williamson, Auckland For services to people with disabilities. MNZM Mr Barry Charles Thomas MEMBER OF THE NZ ORDER OF MERIT Queenstown Mr Russell Kingsley Anderson For services to tourism and business. Alexandra Mr Andrew Kerry Dellaca, JP For services to Fire and Emergency Christchurch New Zealand. For services to children and sports governance. For further information visit dpmc.govt.nz Ms Alison Mary Timms Cromwell For services to local government and the environment.

Integrity and conduct in the public Culture sector – governance in the fishbowl Tuesday 3 July Wellington Event Free live webcast The Wellington Club and Ethics 6.00pm – 7.00pm 5.30pm – 7.30pm Register at iod.org.nz/what-matters

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BOARDROOM June/July 2018 BOARDROOM 5 UPFRONT

APPOINTMENTS Mike O’Brien Member, has been appointed independent Sheridan Broadbent chair of the Health and Safety Association Chartered Member, has been appointed of New Zealand to the board of Transpower

Hilary Poole Anne Callinan Chartered Member, has been appointed Member, has been appointed chair as an independent non-executive GIVEAWAY of Simpson Grierson director and chair designate of Just Water International Business of Change by Mike Pollok, Managing Barbara Chapman Director of Ricoh Member, has been appointed as a director Sam Robinson New Zealand, looks of NZME and has also been appointed Chartered Fellow, joins the New Zealand at how New Zealand to the board of Genesis Energy Young Farmers board organisations can survive and thrive, despite digital disruption. BoardRoom Dr Allan Freeth Belinda Storey has a copy of the book Chartered Member, has been appointed Member, has been appointed to the to give away. To enter chair of the board of disruptive online board of Landcorp Farming Ltd (Pamu) the draw send an email to accounting firm Beany [email protected] with ‘Business of Change’ David Smol, QSO in the subject line. Winners Hayley Gourley Member, has been appointed chair of will be decided by a Member, has been appointed to the Viclink, Victoria University of Wellington’s random draw on 6 July. board of Landcorp Farming Ltd (Pamu) commercialisation company

IoD DIRECTORS’ FEES SURVEY

Thank you to everyone who took part in the 2018 IoD Directors’ Fees Survey. The survey has now closed and our survey partner EY is collating and analysing data. We had a record response this year, with 787 IoD members participating, a 5.5 per cent increase on last year. This provides us with a rich and deep pool of information on directors’ fees and other valuable data for the governance community. The results will be published in the 2018 IoD Directors’ Fees Report, which will be available in August.

BOARDROOM June/July 2018 BOARDROOM 6 UPFRONT

PillarTalk Four questions with Chartered Member Abby Foote on her experience of Four Pillars of Corporate Best Practice, Chapter 2.0, ‘An effective governance culture’.

One Two Three Four

How can How do you think What are some How can a board directors get an directors can of the key steps make sure they understanding contribute to a board can take are receiving of how employees creating a positive to create a healthy comprehensive feel about an workplace culture? ethical culture? reports from organisation’s As they say, leadership starts Some of the key steps that management about culture? at the top. Boards have an a board can take are: ethical matters important role to play in and conduct risk? Some of the options directors supporting the development being clear about values have in assessing culture are: of a positive workplace culture. and expectations The board can: Directors should spending time on site visits demonstrate by their actions ensuring the board is living ensure management talking to staff about the that they understand the by the same values and understand that the board organisation and how they importance of culture in standards they expect sees reporting on the area feel about it driving the organisation and of the organisation as important be prepared to invest in order not accepting behaviours looking for opportunities to support a positive culture. probe reporting to test to attend working sessions that are inconsistent with its veracity Directors can look for ways the ethical standards set with staff from different to encourage or celebrate layers and areas of the look for opportunities to signs of a positive culture being alert to incentives have people from within business where you can in meetings, in engaging that might encourage the observe culture in practice the business come and talk with staff and in setting wrong sort of behaviour to the board about their talking to customers or performance goals for the experience organisation. making sure that values other stakeholders about are part of all recruitment what they observe At the same time, it is demonstrate support for important that directors are decisions from board those raising issues and asking questions clear about behaviours that level down ensure that the way the of internal audit and aren’t acceptable and that they ensuring regular organisation responds to human resources staff are prepared to take action reinforcement of any issue encourages and where unacceptable behaviour expectations – eg code of supports the raising of issues undertaking pulse or is encountered. engagement surveys conduct refresher sessions follow through on any issues raised being alert for indicators from tone or content of encourage open papers or presentations communication between to the board or at social internal audit and engagements that might the board, including be inconsistent with culture confidential sessions between the audit committee and the internal audit lead encourage periodic testing of whistle blowing processes to ensure they work as intended

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BOARDROOM June/July 2018 BOARDROOM 8 FEATURE

Setting the tone on culture

“Culture eats strategy for breakfast,” as consultant Peter Drucker famously said back in 2006. So how do you get it to the top of your board’s menu?

AUTHOR KATE GEENTY

BOARDROOM June/July 2018 BOARDROOM 9 FEATURE

eading by example and both A 2016 report by the United Kingdom’s DIFFERING VALUES OR demonstrating and communicating Financial Reporting Council, Corporate DIFFERENT PERSPECTIVES? desired behaviours is one of the Culture and the Role of Boards, identified most effective ways boards can some key questions a board can ask itself What happens if there’s a cultural Linfluence culture. to determine if it’s doing enough to set the misalignment in the boardroom? Chua “Culture is your ‘why’ and your strategy right cultural tone. They include: says it depends. “Cultural misalignment is your ‘how’,” says Auckland-based cultural has many different sources. It will intelligence consultant Shireen Chua, who How are we demonstrating that be important to identify where the runs Third Culture Solutions. “If you don’t the board’s behaviour reflects the misalignment lies. Is it with the company’s know your ‘whys’, or can’t articulate them behaviour we expect throughout the vision, mission and values or between in a way that everyone in the business is on company? Are we leading by example? members in differing opinions, board, then your ‘hows’ will face challenges perspectives and a different way of seeing of implementation in order to reap the Are we clear about the values and things? There could be other reasons benefits for the business.” behaviours we expect when recruiting such as different personalities at work Chua says that culture is a constantly new executives? or politics that are influencing the changing dynamic construct. “Culture is Do we hold the Chief Executive to dynamics of the board.” like the hidden code and unwritten rules account when we see misalignment? She says the board needs to establish in our boardrooms and organisations that that they are not just throwing out diverse determine how the group functions. It’s Are we discussing culture in sufficient perspectives and different approaches. hard to describe it but it plays a big part depth at board meetings? “You’ve got to really unpack a myriad of of any and every organisation. It shapes complexities to understand why there is the members of the organisation just How are we taking account of culture cultural misalignment. Delving deeper as much as the organisation shapes the in our board effectiveness reviews? to why may unearth differing values, members. You’ll see and feel the culture How can we ensure that we consider perspectives and opinions. You need of an organisation from the stories, the impact on culture in all the diversity of thought in order to cultivate symbols and heroes that the members of decisions that we make? innovation and creativity that many the organisation have. Beyond the vision, businesses and organisations require to mission and values of the organisation, Is there a need for a specific conduct, be successful in today’s VUCA (volatile, these stories are the unwritten codes of ethics or culture committee? uncertain, complex and ambiguous) how members of the organisation operate.” world. It is the antidote to groupthink.” What is the company telling the Leaders play a large part in setting Chua cites the story of six blind men outside world about what it stands for the right cultural tone. “I think leaders and the elephant as an analogy of diversity and how it conducts business? are culture shapers and makers of the of thought. The men, who had never organisation, whether at board level or your Has the company made a public come across an elephant before, have senior management team. They set culture commitment to its values? to work out what it is by each touching or the ‘plumb line’ for an organisation; the a different part of it, then describing it organisation’s values which shows how What behaviours are being driven to each other. To build a full picture of the things are, or they should be done,” when setting strategy and financial elephant (or a situation), they need each says Chua. targets? other’s perspective. “In a boardroom you need those six blind men’s perspectives, What percentage of board time is and they can’t all be describing the trunk, Culture is like the spent on financial performance because you won’t be able to thrive today management against targets? if you all share one perspective,” says Chua. hidden code and And on behavioural performance “How do those six blind men describe the management? Is the balance right? unwritten rules in ‘whole’ elephant? They need to hear each our boardrooms and Is the company’s tax policy consistent other’s perspectives before key decisions with stated values? and strategies are made. To do that in the organisations that boardroom or in any team, everyone needs determine how the How are we challenging ‘group think’ to develop their emotional intelligence and and testing key decisions for cultural cultural intelligence.” >> group functions. alignment?

BOARDROOM June/July 2018 BOARDROOM 10 FEATURE

ENGAGEMENT, DIVERSITY underestimate the importance of simply AND CULTURE talking to frontline staff and supervisors. This can provide information that won’t A workplace’s culture will be evident in necessarily filter through in reports from its staff and employees and the business. the executive. All of these puzzle pieces “If you’ve got a culture where people fit together to build a picture of what the love coming to work, they’ve engaged culture is like. their whole selves while at work and are In a KPMG report, Driving Corporate participating, it will add to the business Culture From The Top, James Lam, a achieving its goals,” says Chua. “People director at E*TRADE Financial in the US, who work full time spend a significant part said that strategy and risk management of their week at work. Creating a positive are critical drivers of organisational culture. culture can enhance productivity as well “During the execution of the strategy, there as creativity.” may be natural conflicts between strategic Chua says there is a growing need to goals and risk management constraints. increase the diversity in boardrooms and How does management resolve those Creating a positive organisations, to reflect and represent conflicts? The board should be concerned culture can enhance the growing diversity in New Zealand’s not only about what business results are population in age, nationality, ethnicity. produced, but how they were produced.” productivity as well Many organisations are measuring this by In the same report, Thomas Wescott, looking at the metrics such as the rainbow an independent director on the board of as creativity. tick, gender and ethnic diversity in their Eximbank Tanzania, said boards need to organisations and leadership. Chua says have continuous discussions with their all of these quantitative measures are chief executive and senior management important as they provide accountability team about values and culture. “Creating to their stakeholders, but for the benefits a dashboard that can be used to monitor of diversity in boards and organisations key indicators of company culture can be to be tangible in business indicators, this a useful tool for both the board and senior cultural diversity needs to develop diversity management,” he said. That dashboard of thought by being harnessed together. data could include employee survey results, “Cultural intelligence, or the capability hotline calls, management appraisals and to function in various cultural contexts, culture related issues that could arise in needs to be cultivated by individual areas such as health and safety, compliance members of the board to every member and customer relations. “A specially trained of the organisation. To be able to interact internal audit team can help develop the effectively in diversity will bring creativity dashboard and begin to ‘audit’ the culture, and innovation into the organisation,” interviewing employees, managers, other Chua says. stakeholders, and reviewing process and Staff engagement surveys, exit business practices, and other factors to interviews, absenteeism, staff retention measure day-to-day practices against the and turnover rates are all useful tools in company’s values, behaviour, codes of gauging your company’s culture. But don’t conduct, etc.,” he said. >>

Shireen Chua, cultural intelligence consultant.

BOARDROOM June/July 2018 BOARDROOM 11 FEATURE

WHEN CULTURE TURNS SOUR regulators. So far, the casualties include HRC stakeholders interviewed for AMP’s chair and several board members, the review didn’t hold back in their Once cultural rot sets in, it can spread, not who resigned after AMP admitted lying to assessments of HRC’s culture. “There’s a just through a company, but through an the Australian Securities and Investments culture of victimisation and secrecy, no one industry. This is evident in the Australian Commission to cover up the fact it had feels that they can speak the truth or be financial services sector, which is currently charged customers for services that heard,” said one responder. “Where there the subject of a Royal Commission. Royal weren’t provided. are issues people are scared to take them Commissions are Australia’s highest AMP is not the only target of the to their managers. Things could be solved level of inquiry. The terms of reference inquiry. Data prepared by the Australian in this place with a genuine apology, but for the inquiry specifically reference Government for the inquiry showed that they get escalated.” whether the misbehaviour in the industry more than 80,000 consumers were given Another interviewee said while they is “attributable to the particular culture bad advice over the past decade, costing didn’t think sexual harassment was and governance practices of a financial them a total of A$5 billion. endemic at HRC, poor leadership and poor services entity, or broader cultural or Closer to home, the culture at New processes were. “New Zealand deserves governance practices in the industry Zealand’s Human Rights Commission more from its human rights watchdog. or relevant sub-sector.” (HRC) has also been under the spotlight. It needs leadership and culture which is Just months into the inquiry, we’re A Ministerial Review of the HRC’s responsive to victims, robust and clearly seeing significant damage to reputations organisational culture was held after understood and owned by all. HRC needs and careers. Revelations include concerns were raised about the way to regain its moral leadership. It is just widespread cases of misconduct such as the commission handled a sexual a brutal place to work at.” falsifying client documents and misleading harassment claim.

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BOARDROOM June/July 2018 BOARDROOM 12 FEATURE

Blind spots in the supply chain Icebreaker’s former chief executive and chairman Rob Fyfe talks to BoardRoom about his ongoing involvement in addressing the problem of modern-day slavery.

AUTHOR AMY WILLIAMS

et’s play a quick game. Look US-based VF Corp’s brands include “If businesses, regulators and the around and pick up an everyday The North Face, Timberland, Vans and media are all focused on enhancing object – a bag, pen or cup – then Lee, and Newsroom reported it has been transparency so we can identify where name the place it was made, and caught up in several cases of bad worker the failings are, it gives us an opportunity Lunder what working conditions. Is it even treatment in Asian factories producing its to address those failings and improve the possible to find out? clothes over the last three years. situation for people.” Rob Fyfe believes the issue of human “When your brand or business is He says the tone can be set in trafficking and modern-day slavery is compromised because somewhere deep the boardroom. more invasive than most people realise. in your supply chain there’s an issue, as “Those directors that have started “I personally believe that in every VF got associated with this situation in to think about this, I suspect they are business, including the ones I work for, Cambodia, that can have a real economic still grappling with [the question of] ‘do there will be slavery, there will be human impact on your business and brand.” I put my head up or am I better to keep trafficking somewhere within our supply Fyfe says VF Corp, which has more my head down to make sure I don’t make chains,” says Fyfe, who will represent than one million people working in its myself a target?’” New Zealand alongside the government supply chain globally, believes that Fyfe says many business leaders he at the next Bali Process Ministerial businesses need to take a lead on the spoke with at a recent chief executive meeting in August, where this country’s issue of ethical supply and modern- forum (which was also attended by the response in the fight against human day slavery. Institute of Directors’ Chief Executive trafficking will be presented. “When you get to that level of scale Kirsten Patterson) had not thought about “This isn’t a priority for most you start to realise that you can really set where modern-day slavery could be New Zealand directors, it’s quite a way an example and influence the way things happening in their supply chain. down the list and I think most directors are done in markets.” “My strong belief is New Zealand holds probably haven’t got their heads around He says the challenge is to drive a its head really high as a country that has just what a risk this could be for their standard level of practice all the way a strong human rights track record… and business at a brand level, which is throughout the supply chain. yet in this area, maybe because we don’t ultimately at a real commercial level.” As New Zealand companies’ supply perceive it’s happening in our backyard, A believer in transparency on this chains continue to make headlines, Fyfe we’re a laggard,” says Fyfe. issue, Fyfe will continue to represent says people’s response to concerns about “I actually feel somewhat ashamed that Icebreaker and its new owner VF Corp ethical supply can either help address the we’re not taking a more dominant leading on the issue of ethical supply chains. problem or push it underground. role on the world stage in this space.” >>

BOARDROOM June/July 2018 BOARDROOM 13 FEATURE

I personally believe that in every business, including the ones I work for, there will be slavery, there will be human trafficking somewhere within our supply chains. Rob Fyfe

When he was chief executive at Icebreaker, Fyfe would not bring a new factory into the supply chain until he had visited and then had an auditor review the workplace conditions. He recalls a visit to Bangladesh three years ago that piqued his interest in the fight against modern-day slavery. Fyfe saw the inner workings of factories he would never do business with, and others that met international standards. Rather than deciding to blacklist Bangladesh as a place to manufacture, Fyfe saw an opportunity to support a factory with world-class working conditions, including free on-site healthcare and childcare. “You can come at it from a New Zealand Inc. standpoint and say this is a human rights violation at a level and scale that I as an individual, as a director, as a New Zealander, need to take a stand on,” says Fyfe. “This is a more important issue for the director community within New Zealand to take a stand and have a voice on.” >>

01: Rob Fyfe 02 (Next page): Rob Fyfe visiting Bangladesh 01

BOARDROOM June/July 2018 BOARDROOM 14 FEATURE

Rob Fyfe shares his top questions to ask around the board table

1 What actions have we taken to ensure there is no slavery, forced labour or child labour within our supply chain?

2 Do we regularly audit the working conditions at our suppliers’ factories?

3 Do we require our suppliers to audit their suppliers and attest to the ethical conditions within their supply chains?

4 Have we established an ethical procurement process and standards within our business?

5 Have we audited our own recruitment standards to ensure there 02 is no risk of unethical practices within our business?

The Bali Process

The Bali Process on It is co-chaired by Since its inception in 2002, In August, New Zealand People Smuggling, Indonesia and Australia, the Bali Process has raised business and government Trafficking in Persons and with more than 48 members. regional awareness of the representatives will Related Transnational consequences of people present a joint work plan Crime is a forum for policy smuggling, trafficking to the Bali Process forum, dialogue, information in persons and related which will include practical kit sharing and practical transnational crime. steps governments and cooperation to help the businesses can take to end region address the problem modern day slavery and of modern slavery. human trafficking.

Leadership

Worker Engagement

Risk Management

www.safeplus.nz

BOARDROOM June/July 2018 BOARDROOM 15 CONTRIBUTION BY MBIE

Modern slavery legislation putting the spotlight on business practices

MBIE looks at the issues of ethical supply n the connected world of Consumers too increasingly want chains, human trafficking and modern slavery. international trade, where goods to see that the products they are New Zealand businesses are having to adapt Iand services travel fluidly across buying are being ethically sourced, to new international legislation around modern borders, legislative and social shifts that no one is being exploited to slavery, but are they being proactive enough, from the other side of the globe can bring them their cheap t-shirt. or do they risk being left behind? have an impact on business. One Now with the Australian such growing movement aims to Government introducing their eradicate ‘modern slavery’, which own modern slavery legislation to calls for businesses to do more to Parliament by mid-2018, following eliminate labour exploitation from the release of their inquiry into their supply chains. exploitation called Hidden in Plain A number of countries Sight, many New Zealand businesses including the United Kingdom, the may soon face additional demands Netherlands, France and the United to demonstrate their adherence States, as well as the European to international standards of Union, have strengthened legislation transparency. The question for to encourage business to take action businesses now is whether they’re to eliminate ‘modern slavery’ in prepared for such scrutiny. >> their companies and supply chains.

BOARDROOM June/July 2018 BOARDROOM 16 CONTRIBUTION BY MBIE

Worldwide, it is estimated there are 40.3 million people in modern slavery, with two-thirds of them in the Asia-Pacific region.

MODERN SLAVERY Another recent case investigated IN NEW ZEALAND by Immigration New Zealand involved the exploitation of Filipino workers at While the term slavery may seem 3 Kings Food in Birkenhead. One Filipino antiquated to some, in this case it worker was doing at least 10 hours per includes the crimes of human trafficking, day, six days a week, without any breaks, slavery and slavery like practices such as in what was described as “a form of servitude, forced labour, forced or servile modern slavery” by an Auckland District marriage, the sale and exploitation of Court Judge. children, and debt bondage. “Human trafficking and slavery is an These are practices which have extreme form of exploitation,” says Miller. persistently survived long after being “It involves the manipulation of outlawed in most countries and the the victim, resulting in the serious Dr Rebecca Miller abolitionist movements in the 1800s. undermining of an individual’s personal Unfortunately, New Zealand is no freedom and ability to make choices for exception when it comes to instances of themselves through the use of threats, So what should boards be asking modern slavery, says Dr Rebecca Miller, forms of coercion and/or deception. Our their chief executives? Manager for People Smuggling, Human third human trafficking case is currently Trafficking and Regional Cooperation at before the courts.” 1 What policies do we have in Immigration New Zealand (INZ). One recent Labour Inspectorate case place that state our position “In the past there has been a certain involving a BP station in Hastings, found on human and labour rights? amount of naivety in New Zealand, with employees who said they were subjected many choosing to believe that these to working conditions that verged on 2 Is this communicated to kinds of practices don’t happen here, or slavery. Two migrants were living on the our suppliers, business that we’re too isolated for crimes such as floor of accommodation provided by the partners, etc? human trafficking and modern slavery to employer while paying excessive amounts 3 Have we conducted a risk be taking place. Unfortunately, no country in rent, despite poor living conditions. assessment to identify areas in the world is immune to these crimes, They were working 16-hour shifts, with of concern in our value chain? including New Zealand, as our recent lesser hours falsely recorded in the cases have shown,” says Miller. businesses records. The ERA ordered the 4 What steps have taken place The first person to be convicted of company, Pegasus Energy Limited, to pay to mitigate these risks? human trafficking in New Zealand was upwards of $132,000 in arrears to the two Feroz Ali, a Fijian national with New staff, and $120,000 in penalties. 5 Do we have a system Zealand residence, in 2016. Ali was “Worldwide, it is estimated there are where employees or other sentenced to a total of nine years and 40.3 million people in modern slavery, stakeholders can report six months for enticing 15 Fijians to with two-thirds of them in the Asia- potential cases of exploitation? work in New Zealand after answering Pacific region. New Zealand businesses advertisements placed in Fijian have power to influence change that can newspapers by Ali’s Fiji-based wife and impact people’s lives. Our multinational sister-in-law. The workers borrowed large companies, in particular, have a critical sums of money, indebting themselves, but role to play in eliminating these practices when they arrived here they were forced in their supply chains, both here at home to work for long hours, live in cramped and in the businesses they work with conditions and paid little, if anything. overseas,” says Miller. >> One woman at trial testified that she was given $25 after pruning fruit every day for three weeks.

BOARDROOM June/July 2018 BOARDROOM 17 CONTRIBUTION BY MBIE

WHAT WILL A SPOTLIGHT ON reputational risk – particularly if a INCREASED RESPONSIBILITY YOUR SUPPLY CHAIN SHOW? company has taken no steps – and FOR BOARDS consumers are increasingly showing their The UK Modern Slavery Act introduced support with their wallets, both at home In addition to overseas anti-slavery in 2015 has been far reaching, requiring and abroad,” says Donaldson. legislation, a number of other companies with a physical presence in “If you look to the recent release of developments and initiatives are raising the United Kingdom, and a global turnover the Ethical Fashion report here in New the bar for businesses in regards to of £36 million or more, to report on the Zealand, and the demands upon fashion human and labour rights. For example, the steps they are taking to eliminate modern companies to monitor their supply Human Rights Commission is promoting slavery in their supply chains. Although chains, you can see the direction this is the uptake of the UN Guiding Principles on only a small number of New Zealand going. In the report companies are not Business and Human Rights (UNGPs) by businesses have been directly affected by only requested to provide evidence of the government and NZ businesses. The this legislation, many which supply to UK the systems and processes they have UNGPs state that governments have a and European customers are facing some in place, but also to publish the names duty to protect individuals against human form of third-party audits. and addresses of their suppliers. With rights abuses by third parties, including “With our trans-Tasman neighbours technological advances like block- businesses, and that companies must following the lead of the United Kingdom chain technology, transparency and respect human rights in all businesses by introducing their own legislation accountability this will increasingly be regardless of size, location or structure. these pressures could be felt much business as usual.” The UN Sustainable Development more widely,” says Employer Systems & In the global market place it could soon Goals (SDGs) are also gaining ground. Assurance manager Tania Donaldson. be the case that if you can’t demonstrate The 17 goals are a universal call to Her team, part of the Ministry of Business, you are conducting business responsibly, action to end poverty, protect the planet Innovation, and Employment, supports or if poor news regarding the treatment of and ensure that all people enjoy peace industry bodies and large businesses in workers arises regarding your business, and prosperity. A number of leading New Zealand to get their systems in place there could be very serious financial companies such as Air New Zealand, in the human and labour rights area. consequences. Companies affected by Sanford, and Vector are addressing the “It is estimated having Transparency in this legislation will simply choose to take goals in their sustainability programmes, Supply Chains Statement requirements in their business to companies which have and more have pledged to do the same. It Australia, similar to what the UK Slavery good systems in place, rather than risk should be said that more than 90 per cent Act calls for, will affect between 500 and tarnishing their brand, she says. of the Sustainable Development Goals 1,000 New Zealand businesses directly, “For businesses to remain competitive (SDGs) targets are linked to international while having a significant further impact in the future, they will have to do more human rights and labour standards. on New Zealand businesses as companies than just offer the cheapest price, What sets the anti-slavery legislation directly affected look for assurance that but demonstrate they have strong apart from these sustainability initiatives their suppliers are compliant.” environmental and social governance, is the responsibility of boards. The UK Australia is New Zealand’s second including when it comes to the well- Modern Slavery Act not only requires biggest trading partner after China, and being of workers. Not only does this help companies to produce a publicly available our top destination for foreign direct you manage these risks, having strong statement on the steps they are taking to investment, so any such laws could create assurances in place can actually be a eliminate modern slavery in their supply an impact on New Zealand businesses. value-add for businesses, with increasing chains, but it also requires the statement “A requirement of the UK legislation consumer demand for ethically produced to be approved by the board of directors is that these statements, saying what goods. A brand built upon sustainability and signed by the chief executive. steps a company has taken to remove can open up new opportunities and exploitation, are signed off by the Board potentially tap into new markets.” of Directors. This carries a significant

BOARDROOM June/July 2018 BOARDROOM 18 FEATURE

The importance of ethical leadership

Are New Zealanders too polite to speak up when we see ethically murky behaviour at work? Are we too relaxed about formalising ethics? Dutch academic Karin Lasthuizen, who currently holds the Brian Picot Chair in Ethical Management at Victoria University’s School of Management in Wellington, thinks we might be.

AUTHOR KATE GEENTY

BOARDROOM June/July 2018 BOARDROOM 19 FEATURE

asthuizen says ethical Although New Zealand’s public leadership is about sector ranked the least corrupt in the cultivating organisational world in Transparency International’s ethical behaviour through last Corruption Perceptions Index, Lrole modelling, communication and complacency remains a big challenge enforcement. Based on research she according to Suzanne Snively, the has done so far, Lasthuizen thinks chair of Transparency International New Zealanders find the enforcement New Zealand. “Perhaps because of angle of this the most difficult. “It’s our high ranking, the prevention of about discipline, rewarding good corruption is too often a low priority. behaviour and addressing bad Work to enhance transparency must behaviour,” she says. She thinks continue for New Zealand to maintain New Zealanders might be too reticent leadership in the fight against when it comes to questioning corruption.” colleagues or employees if they see Snively believes that New Zealand something that doesn’t sit well with boards need to prioritise the policies them. “In the Netherlands for instance, and processes they require to manage we are quite critical, direct, open, and bribery, corruption and fraud. “It is this might be considered sometimes surprisingly hard to convince business rude. Here in New Zealand, the culture to be proactive in strengthening their Karin Lasthuizen is very polite. So people seem to find tone at the top, their culture, their it more difficult to address others and internal prevention processes. With say ‘why are you doing this and why some rare exceptions, businesses do I feel uncomfortable with it?’” seem to wait until they have a crisis Lasthuizen says ethical leadership or there is a legislative requirement means those issues need to be before they focus on bribery, addressed, and an ethical culture corruption and fraud.” created “where we can have those It’s not as if New Zealand is conversations in a polite way and immune to corruption and fraud. where we can give that feedback or One of the more high profile cases have critical discussions. I don’t have came before the courts last year, the answer yet as to why people here when former Ministry of Transport don’t see that kind of question as the staffer Joanne Harrison was jailed for start of an open conversation.” stealing more than $725,000 from her Part of the reticence might come employer. Her misdeeds ultimately led from a belief in the New Zealand to the Auditor-General stepping down business community that most people and a review of legislation protecting are decent and ethical, that ethics are whistle-blowers. >> implicitly understood and therefore aren’t something that need to be specifically discussed and addressed.

BOARDROOM June/July 2018 BOARDROOM 20 FEATURE

At the time of Harrison’s offending Rather than just expecting people she was a senior manager at the Ministry to behave ethically, boards need to of Transport. Her crimes included faking spell out ethical expectations and invoices and using the money to pay off guidelines, and have ethical values credit cards and her mortgage. Colleagues sitting alongside business values when brought Harrison’s fraud to the attention it comes to strategy, governance and of her then boss, Martin Matthews, but decision making. “Those values should their concerns didn’t lead to a robust be embedded into organisational culture investigation. Matthews later went on through a code of ethics supported by to become Auditor-General, but stepped communication, engagement, training down from that role after Harrison’s and reinforcement, leadership and an conviction. At the time of his resignation environment that supports speaking up, he said he thought he had dealt and risk assessment, monitoring and appropriately with the concerns raised accountability,” IBE’s report says. by the whistle-blowers. “She gave me explanations that I accepted. It turns RISING EXPECTATIONS out I was wrong, I should have been more suspicious.” Regulators are making it clear that The staff who spoke up about taking a more formalised approach to Harrison’s fraud later claimed she had business ethics is now an expectation. 01 made their lives difficult at the ministry Having a code of ethics is expected for after they raised concerns. Some of them companies listed on the New Zealand Stock lost their jobs in a restructure Harrison Exchange and it is also principle 1 in the was involved in. The State Services Financial Markets Authority’s Corporate Commission launched an investigation Governance Handbook. The Institute into the treatment of the public servants of Directors has a Code of Practice for involved. The legislation covering whistle- Directors that all members sign up to, blowers, the Protected Disclosures Act and the IoD also covers ethics and culture 2000, is now being reviewed with in its Four Pillars of Governance Best the intention of bringing it into line Practice for New Zealand Directors. with international best practice. It’s not just regulators and membership bodies that expect high ethical standards. EXCEPTION OR THE RULE Employees also want assurances that they are working with and for ethical people. 02 The Institute of Business Ethics (IBE), “There’s a new generation of people whose purpose is to promote high coming along who want it. Millennials standards of business behaviour expect and want to be working in an 01: Suzanne Snively based on ethical values, released its ethical company where there is fairness, 02: Jane Arnott first New Zealand publication late last where supply chains are considered, year, called Setting the Tone: A New where work practices are less about Zealand perspective on ethical business greed and more about integrity,” says Millennials expect leadership. The report, which included Jane Arnott, IBE’s representative in interviews with 24 senior New Zealand New Zealand. and want to be business leaders from a range of External stakeholders also expect working in an ethical companies and sectors, found while many businesses to be able to demonstrate companies involved supported business a commitment to ethical values, says company where there ethics in principle, the implementation Transparency International’s Snively. of a business ethics programme to “Shareholders are increasingly looking is fairness help guide staff to do the right thing for responsible businesses to place Jane Arnott was the exception rather than the their investments, staff prefer to work rule. “Some organisations believe they somewhere ethical, customers prefer to operate ethically without ever having buy from them, suppliers and distributors a conversation about what that means prefer to deal with them. With global, in practice, for example, in areas like networked communications, society is procurement, recruitment, or engaging better informed about the structure of with customers,” the report states. sustainable investments, so they know when profits are only short-term and when a business is failing to do things to be sustainable and viable.” >>

BOARDROOM June/July 2018 BOARDROOM 21 FEATURE

Snively believes there are opportunities for New Zealand businesses if they can What is ethical leadership? demonstrate high ethical standards. “Corruption is a huge international problem, so if we were to grasp the IT GOES BEYOND IT PROMOTES AN nettle, so to speak, and decide to provide COMPLIANCE WITH OPEN CULTURE leadership at the top through board THE LAW chairs, we could outpace the world Where employees can ask very quickly.” Business success cannot be questions and raise issues without She believes if New Zealand directors achieved through a culture of fear or retaliation. This ensures demonstrated more of a commitment to fear or control, or ticking boxes that poor, unwise or non-compliant ethical leadership and values it would for regulatory requirements. behaviour is reported and dealt lead to more listings on the New Zealand It has to be grounded in core with. Speaking up is seen as share market and increased activity values and an ethical culture. positive and encouraged. It enables and interest from ethical investors, from early intervention and prevention overseas as well as New Zealanders. IT SUPPORTS INDIVIDUAL and helps to protect a company’s “There are just so many positive things DECISION-MAKING reputation. that would flow on from it were boards to make ethical leadership the centre of Empowering people to make their Source: IBE Setting the Tone: A New Zealand perspective on ethical business leadership their strategic planning, instead of a ‘nice own decisions while taking into to have’ or something to delegate to their account organisational values. human resources team. Human resources Creative problem solving, reasoning teams play an important role too, don’t and discretionary judgement get me wrong, but the thing is, ethical based on ethical values needs leadership should be core to everything to replace blind obedience. This an organisation does.” >> gives employees the confidence to deal with situations that are not specifically covered in the ‘rulebook’ and encourages them that ‘doing the right thing’ is the right thing to do.

BOARDROOM June/July 2018 BOARDROOM 22 FEATURE

There are different ways to be a good person and there are different takes on ethics. Karin Lasthuizen

PROVIDING ETHICAL LEADERSHIP One step a board can take is making PERSONAL VS BUSINESS ETHICS sure it is getting all relevant information There is no one-size-fits-all approach fed back from management. Snively Part of a board’s role in providing ethical when it comes to ethical leadership, no says boards will enhance value if they leadership is making sure that everyone single checklist that can be applied to empower their Audit and Risk Committee is working under common guidelines, all organisations to tick off. What board to start from the premise that business towards common goals. Lasthuizen says members can do is create an ethical sustainability is its greatest risk, but that people tend to be passionate about their framework that encapsulates the values it can also be its biggest opportunity. personal ethics, but everyone’s personal of their organisation and allows them “Based on this, it then can build the ethics are different. “There are different to feed that ethos through the business. framework for monitoring risk adapted ways to be a good person and there are There are key practical steps boards to its business priorities. The information different takes on ethics. Boards need to and their chairs can lead and oversee required for this more business-focused make sure there are ongoing discussions to make sure ethics are a core component approach to risk, requires information to make sure that those differing personal of the way business is conducted from senior management that goes wider ethics can work together to become throughout the organisations they work than what is provided through monthly cohesive workplace ethics.” with, says Snively. “The fastest way accounting reports. The board has a role The first step is identifying the values to get up to speed would be for board in motivating the chief executive to be that an organisation finds important. chairs to take a real interest in this and engaged in generating knowledge about “The board has to be specific about the put in regularly measured preventative this and reporting about this.” values they find important and how they measures. For example, the code of Transparency International believes can make sure there are discussions about conduct is something that connects all there are seven key actions to prevent them,” Lasthuizen says. “Board members divisions of the organisation. The values bribery, corruption and fraud that need to think about what other people are something that everyone can sign up all boards should enable. They are: need in order to get ethics more at to. It takes tone at the top to say that this setting the tone at the top; creating and the forefront of decision making. is important, and it takes tone at the top communicating a code of conduct; up-to- It’s about how to discuss different kinds to actually be leading it, exhibiting it and date knowledge of relevant legislation and of values. That’s maybe a different kind illustrating that this is what they believe. regulation; avenues for reporting breaches of approach.” “The reality is, it’s very easy to do,” in ethical standards; due diligence of The board also needs to make sure says Snively. “None of these things are distributors, agents and joint ventures; that its code of ethics, its core values, are hard. We’re not asking for anything corruption prevention, communication part of an ongoing discussion throughout like rocket science, what is important and training; and regular risk assessments. the organisation, about what those core >> is commitment.”

BOARDROOM June/July 2018 BOARDROOM 23 FEATURE

values actually mean – and not in a ‘tick THE DANGERS OF ‘DEAL FEVER’ the box’ kind of way. “It’s about having an ethical dimension in all decisions. It’s not Board members also need to be aware of just about how to avoid bad behaviour, but how remuneration and bonus structures also how are people doing good things? could influence the ethical behaviour For instance, being low on corruption of employees. doesn’t mean you are high on ethics,” Arnott says directors need to Building says Lasthuizen. understand that what is incentivised will She says that drafting an organisational be pursued. “People will seek to achieve, board culture code of ethics together with employees so directors need to be very, very in touch can be a strong instrument to create with what the unintended consequences The Institute of Directors’ Four or strengthen an ethical climate. “But can be of certain types of incentives. They Pillars says a functional culture as they say ‘a code is nothing, coding need to look at where the effort is going is essential to a high-performing is everything’, which means that it is into ensuring that the company’s values board. “Within the corporate all about discussing the relevant moral are being honoured within the framework structure, the board has the highest values and norms, and including specific of what’s being incentivised. It’s trying standards of accountability and moral dilemmas and approaches, even to ensure there’s a connection between liability while operating with the per unit or role, which makes it effective ‘here are our values’ and ‘this is what we least amount of time and almost in raising ethical awareness and decision- are incentivising or building our bonuses no day-to-day control. Sound board making throughout the organisation. Also around’. That’s really important.” architecture and processes provide for boards, these discussions are relevant: She says people are likely to put aside a platform for good governance but ‘what are our guiding principles and which their personal moral standards at work if do not guarantee it. The key is ethical dilemmas occur within this board they think that is what is expected from to build and nurture a healthy or as board members?’” their role. “It may be that a sales manager operating culture with effective Including specific questions or is incentivised on winning, so will operate interaction between skilled and examples in a code of conduct can be at a level of almost moral blindness, experienced people.” an effective way to make it come to life. because that person is hell-bent In IBE’s report, Z Energy CEO Mike on winning.” To read more from the Four Pillars Bennetts said the organisation had Bruce Plested, the Executive Chairman go to iod.org.nz/FourPillars. included an ‘ethical test’ in its code of and founding owner of Mainfreight, talked conduct. “Three questions that people in the IBE report about the steps he SOURCE: THE FOUR PILLARS OF GOVERNANCE BEST PRACTICE FOR should answer when they face a difficult took to minimise the risk of incentivised NEW ZEALAND DIRECTORS. decision are: Does it feel right? Can I tell workers. He decided to scrap sales my grandmother? If it’s in the paper, will targets and replace them with a weekly I mind?” Bennetts said. profit report “that allows the board to maintain the watch over performance without creating pressure on people to compromise ethical standards.”

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BOARDROOM June/July 2018 BOARDROOM 24 MARSH People and IT risks at the fore DENISE MOLLER, MARKETING & COMMUNICATIONS MANAGER, MARSH

T and people risks are at the forefront of trillion – which really highlights the issue. Boards must not only feel confident directors’ risk concerns according to the It is expected that these losses will rise that there are plans in place to address Ifourth Directors’ Risk Survey Report. to as much as US$8 trillion over the next and deal with cyber attacks, they must Run by Marsh in conjunction with the five years. In fact, Lloyds has calculated also understand the implications from the Institute of Directors (IoD), the results that the take-down of a single cloud same happening to a supplier or vendor. have once again reflected changes in the provider could cause as much economic IT risks also featured in our top five evolving local and global risk landscapes loss as US$50 billion to US$120 billion – key internal risks with disruption to – with cyber, IT, talent attraction and somewhere between the losses recorded business following a major IT failure, such retention and key person risks among for Superstorm Sandy and Hurricane as software issues, ranking second and the risks highlighted. Katrina. loss of data, data corruption or failure For the second year running, cyber Thirty per cent of respondents of systems security or website security was considered to be the biggest external said that did not have an effective risk ranking third. risk affecting New Zealand entities with management framework in place to A key consideration here, in regards 86 per cent of directors rating cyber manage cyber risk. to the loss of data, is the incoming risks as medium or high. It was also seen Key findings from the Global Cyber European General Data Protection as the biggest emerging risk currently Risk Perception Survey, run by Marsh and Regulation that came into force in May facing organisations with 78 per cent of Microsoft, show that only 35 per cent of 2018. The legislation impacts New respondents. New Zealand respondents were highly Zealand companies doing business with This trend is unsurprising given the confident in understanding and assessing EU countries. In addition, New Zealand increasing amount of high profile cyber their cyber risks. Forty-three per cent of is currently reviewing its Privacy Act to attacks around the globe, with cyber respondents did not assess the cyber ensure that it keeps pace with changes breaches recorded by businesses almost risks of their vendors or suppliers and to information and communications doubling since 2012. It is however the 25 per cent did not know if they were technology. Marsh anticipates therefore economic impact to organisations – even exposed to any risks from their that there will be mandatory reporting estimated by the World Economic Forum supply chain. of data breaches as part of this review. >> to be between US$1.5 trillion to US$4

BOARDROOM June/July 2018 BOARDROOM 25 MARSH

IT IS PEOPLE, IT IS PEOPLE, MANAGING RISK Ranking of internal risk issues IT IS PEOPLE Forty-two per cent of those responding 1 Loss of a key person As a famous Māori proverb once to the survey stated that their board had said, the most important thing in the an objective to become more actively 2 Disruption to your business following a world is people – he tangata, he tangata, involved in risk, while 29 per cent said major IT disruption, eg software failure etc. he tangata. that their involvement in risk was due 3 Loss of data, data corruption or failure In 2018, people are at the forefront of to greater perceived risks in the current of systems security or website security the biggest internal risks facing directors business environment. and boards, with the loss of a key person The fact that our survey respondents 4 Other ranked the highest and talent attraction increased from 415 in the last survey to and retention at number five. 570 this year, certainly reinforces a greater 5 Talent attraction and retention Talent attraction and retention was interest in what is happening in the rated the second largest emerging risk. risk space. For many organisations their people In relation to how the board’s role has are their key competitive differentiator, evolved in terms of risk management, so making sure that current employees’ 23 per cent of directors said that their Ranking of external risk issues needs are met and that there is an organisations did not have a clear board- environment that is appealing to attract approved risk strategy and there were 1 Cyber new people is imperative – especially several barriers as to why. given the growing war for talent. For over a third of respondents it was Current research often refers to these that other areas have greater priority, 2 Brand and reputational risk talent imperatives as ‘meeting the needs while 20 per cent stated that they had 3 Disruption to your business following of the workforce of tomorrow’. The latest a general lack of awareness of key risk a major natural catastrophe, such as Global Talent Trends Study from Mercer management concepts. Other barriers earthquake, flood or extreme weather tells us in this regard that “in exchange were around lack of resources, lack of for committing to ongoing professional senior management commitment, inability 4 Financial risks evolution, employees want flexibility in to model the magnitude of the risk and how, when and where to work. They want applying the current risk management 5 Increased competition their careers to conform to their personal framework to new risks. lives, not the other way around. They want Today’s uncertain environment a sense of well-being and purpose, which emphasises the importance of having a individuals experience through work in robust and proactive risk management unique ways.” framework in place to identify and Ranking of emerging risk issues In essence this is a focus on workplace mitigate risks and to seize any flexibility, meeting the diverse needs of opportunities they may present. 1 Cyber risks people and a focus on employee wellbeing. One easy step to start addressing For the 32 per cent of respondents who do these barriers is to commence open 2 Talent attraction and retention not have procedures in place to manage discussions with your managers and their talent risks, this should be a key area advisors regarding loss scenario planning. of focus. 3 Increasing influence of social media The death or permanent disability of IN CONCLUSION a key person can also have a significant 4 Earning volatility impact upon the continued success of a It was heartening to see that boards have business – especially an SME. It can cause a greater desire to become more actively 5 Impact of disruptive technology major financial loss, loss of confidence involved in risk. in employees due to lack of leadership Whether it is IT or people-related A full copy of the Directors’ Risk and the opportunity for competitors risks, organisations that recognise the Survey Report can be downloaded to take advantage of the issues being opportunities in innovating around from marsh.co.nz/directors. experienced to snatch market share. corporate resilience, and can effectively Having succession planning in identify emerging risks and integrate place is an important part of managing them into their strategic and operational this risk. In addition, you can provide planning, will be those that can more financial protection by taking out key easily position themselves to improve their person insurance. resilience and gain competitive advantage.

BOARDROOM June/July 2018 BOARDROOM 26 FEATURE

Generations to come

Diverse experience, skills and promote diversity of all kinds, including In the push for diversity, age is backgrounds are valued around the Institute of Director’s Future Directors recognised around the world as being an the board table. Amy Williams programme. important consideration. A recent report looks at what younger directors Future Directors gives up-and-coming by PwC in the United States, A census of can bring to the mix. directors the opportunity to observe and directors aged 50 and under, shows 90 participate on a company board for a year, per cent of directors say age diversity is e’ve all heard of the gender while giving the company exposure to the important – beating out gender, race and gap, but what about the age benefits a young mind can bring. other forms of diversity. Wgap? As millennials become These benefits include bringing a fresh “The younger generation has a huge the dominant force in the workplace, perspective to the boardroom, tapping amount to contribute and also has huge companies with younger directors may into the skills of a generation that does experience. I think when people hire a have a distinct advantage. things differently, and seeing how age younger director they think they’re getting Veteran director Ted van Arkel diversity can impact board dynamics – someone with no experience and that’s says senior directors bring important to name a few. not the case at all,” says James Bushell, experience and wisdom to boards, Van Arkel has been involved in 31, who chairs the Wellington Chocolate but he is also aware of the need mentoring new directors, including Factory and sits on a number of boards to help bring in new talent and fresh with Future Directors and also the IoD’s where he is the youngest director. perspectives, alongside a push for Mentoring for Diversity programme, and “When you start up your own broader diversity. says it’s a two-way learning relationship. companies you learn a lot of things the Van Arkel chairs Restaurant Brands “It was beneficial to me to stay hard way and you’re exposed to the and sits on the boards of both private and in touch and see how they saw the entirety of a business.” public companies, and says shareholders world operating.” The Wellington entrepreneur are looking for youth but also for people Exactly how are millennials redefining specialises in helping businesses be more with some experience. the workplace? sustainable and ethical and says age “There’s more energy around the A KPMG study published last year diversity is important in the same way as table and [young] people look at it in the UK, Meet the millennials, says other aspects of diversity – it provides from a different perspective, they are Generation Y grew up in a time of rapid different perspectives. highly tuned with regards to the digital change, and have different priorities and “You’re looking at a group of people landscape,” he says. expectations from previous generations. who grew up in the digital age and so I “It would be fair to say that we try to The study says millennials want to think they do have different expectations lower the average age rather than increase know the reason before doing a task, as consumers and customers but also as the average age around the table when they are job hoppers who stay in a role for a workforce,” Bushell says. there is a replacement director required.” a maximum of three years, are tech savvy “There’s a greater likelihood that they Although there are no official figures and want to enjoy their work experience. will understand industry trends of being mapping age diversity in New Zealand They are also less afraid to challenge the sustainable and ethical, and what’s driving boardrooms, there are programmes that system and express what they are thinking. consumer and workplace decisions.” >>

BOARDROOM June/July 2018 BOARDROOM 27 FEATURE

Vanessa Stoddart, 52, is also among “Having a range of generational the younger directors at some of the perspectives is really important. To have board tables she sits at, which include insights from younger people who are public, private, co-operative, and voluntary more up to speed than others and not appointments – a broad range including embedded in a way of thinking… but also chair of Global Women. with respect for experience and wisdom She says age needs genuine that comes with time,” Frey says. consideration within the wider diversity “It’s really important to think that conversation, and prefers not to brand way for the longevity and successful directors as being older or younger. succession of a business.” 01 “We never talk about the older person At the board table, Frey brings her own at the board table, so why should we talk perspective and also thinks about those about the younger person at the board younger than herself: “To be able to look table? I don’t think of them as younger, at a strategic discussion from ‘how would a I think of them as another dimension at young professional react or respond to that the table.” direction?’ That was often a talking point.” Stoddart says a director under the “For me it’s about understanding your age of 40 is likely to bring a different audience. Are you really sure what you’re perspective, being digitally savvy and offering and the service you’re providing clued up on the ways of their generation. is… have you got the hearts and minds “The beauty of the age dynamic is it of the people that subscribe to your brings a perspective of today’s customer organisation in your thinking?” 02 and the future customer and the future If younger directors can offer employee,” says Stoddart. experience suited to a company’s 01: Vanessa Stoddart “We talk about the generation we see challenges and future direction, how can 02: James Bushell and know today, but our kids are going to boards encourage appointments? be in a different world altogether and we Stoddart says it needs to come from need to think about the opportunities and the top: “Success in all of this for me The beauty of the age implications that arise from that.” is that we have chairs championing for Michelle Frey won the IoD’s Wellington change. They’ve got to change the view dynamic is it brings a branch’s Aspiring Director Award last year that experience and wisdom only come perspective of today’s and is deputy chair of the NZ Recreation with age. Younger directors can also bring Association and sits on the Central experience and wisdom, it’s just different customer and the District Cricket board. experience and wisdom but sometimes The 36 year old says age diversity more relevant depending on the business. future customer and goes both ways and seeking the opinions Success is that you have both at the table.” the future employee of those older and younger than herself Vanessa Stoddart is valuable.

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BOARDROOM June/July 2018 BOARDROOM 28 GLC UPDATE

FELICITY CAIRD GENERAL MANAGER, GOVERNANCE LEADERSHIP GLC Update CENTRE (GLC) Legislative reform on the horizon Privacy reform Future proofing well overdue New Zealand’s rivacy law reform is on the way with the Privacy tax system Bill before the Justice Select Committee. PIt has been 25 years since the Privacy Act early 7,000 submissions were made to the Tax 1993 came into force. Since then, the rise of the Working Group on its review of New Zealand’s internet and the digital economy have transformed Ntax system. It is important that our tax system organisations and the use of personal information. is fit for purpose and sustainable going forward. New The Bill aims to modernise the privacy landscape Zealand has a highly regarded tax system with many in New Zealand, while retaining the 12 information strengths. However, we need to consider what can be privacy principles under the current Act with some improved to ensure it is future proofed. Our submission alterations and additions. A key change discussed comments on the review at a high level and: in the IoD’s submission is the proposal to introduce mandatory privacy breach notification to the Privacy supports the current broad base, low tax approach Commissioner and affected individuals. for the tax system welcomes the Government’s initiative to explore Are you ready for GDPR? the rate of company tax Does your organisation have customers, clients supports GST applying broadly with no or employees who are European Union (EU) new exceptions citizens? The EU’s General Data Protection Regulation 2018 (GDPR) came into force on emphasises that no new taxes should be 25 May 2018, and this far-reaching regime covers introduced without comprehensive analysis, New Zealand organisations doing business with justification and consultation the EU and processing the data of EU citizens. Our DirectorsBrief Are you ready for GDPR? An interim report from the Group is due provides an overview of key elements of the in September 2018. GDPR, including data protection principles and steps to prepare. Governance developments

he Justice Committee reported back to the House in June on the Trusts Bill. Our TDirectorsBrief What’s changing for Trusts? published in May looks at some of the key features in the Bill that trustees should be monitoring. In April, the IoD submitted on the State Sector and Crown Entities Reform Bill which will impact the role of Crown entity boards. Our DirectorsBrief Diminishing the role of Crown entity boards? discusses the key proposed changes in the Bill. In May, the IoD appeared before the Governance and Administration Committee to advocate for change to the Bill. The Committee is due to report to the House by 20 August 2018. >>

BOARDROOM June/July 2018 BOARDROOM 29 GLC UPDATE

shareholder approval for transactions that Ambitious NZX significantly change the nature or scale of the issuer’s business (in addition to the current looks overseas major transactions rules) ZX CEO Mark Peterson has been in the role for a requirement to publish preliminary half- over a year and recently spoke at a Wellington year financial statements (and removing the Nbranch event about NZX’s refreshed strategy requirement to publish a separate half-year report) to simplify and grow its business. NZX’s strategy centred around four key themes: a requirement for issuers to have only one New Zealand resident director (down from two) refocus on core business such as improving a requirement for a minimum of two customer relationships and increasing liquidity independent directors (and new requirements in secondary markets. NZX has also divested around who is independent in the NZX Corporate non-core products such as its former newspaper Governance Code). Farmers Weekly

growth opportunities with dairy derivatives, The IoD’s submission is available on our website. debt and environmental and energy offerings. The new Listing Rules are expected to be finalised maximise options including SuperLife, later this year and will come into effect in 2019. Smartshares and Wealth Technologies get fit for the future by focusing on managing Culture and conduct lessons from costs and capital investments. APRA’s inquiry into CBA Australian banks have been subject to NZX is also looking to create scale via alliances with considerable scrutiny in this year’s Royal global exchanges. Earlier this year, it entered into Commission. Before this began, the Australian MOUs with exchanges in Hong Kong and Singapore. Prudential Regulation Authority (APRA) initiated Under the MOUs, the parties will promote market an inquiry into a number of high-profile conduct development initiatives in a range of areas including and compliance incidents at the Commonwealth foreign investment, derivatives, depository receipts, Bank of Australia. In April, APRA published its listed debt, dual listings and exchange related funds. report with findings and recommendations to They also agreed to share information on green improve the bank’s frameworks and practices in finance and sustainability initiatives. relation to governance, culture and accountability. As part of its strategy, NZX is reforming its Listing APRA found that the bank’s continued financial Rules. The main change is that the NXT and the success “dulled the senses” of the institution, NZAX will be consolidated into NZX Main Board. including the board and board committees. Other proposed changes include introducing: APRA’s media release on the report notes that a number of prominent cultural themes new eligibility rules for listing (ie requirements were found, “such as a widespread sense of for 300 financial product holders, 20 per cent complacency, a reactive stance in dealing free-float and a minimum market capitalisation with risks, being insular and not learning from of $15 million) experiences and mistakes, and an overly collegial and collaborative working environment which >> more expansive continuous disclosure obligations lessened the opportunity for constructive capturing constructive knowledge of directors criticism, timely decision-making and a focus and officers. This would be a significant change on outcomes.” There are learnings for boards and would include situations when issuers ought and board committees especially around the reasonably to have come into possession of oversight of emerging non-financial risks. material information The report is available at apra.gov.au. >>

BOARDROOM June/July 2018 BOARDROOM 30 GLC UPDATE

AI and ethical challenges Nobody can predict with any certainty Business Ethics Briefing how Artificial Intelligence (AI) will transform Briefing our future. However, we can be sure the reach of AI will continue to grow and at an increasing pace. AI has significant potential Business Ethics & to positively change business and society Artificial Intelligence but it also comes with challenges, including IBE interactive framework of fundamental values and principles for the use of Artificial Intelligence ethical considerations. In developing AI (AI) in business. Encouraging systems, boards and organisations will need organisations to engage in a to consider, for example: multi-stakeholder dialogue that Accuracy » always considers a commitment to who is going to be impacted by AI? ethical values in the application r Respect of privacy » and impact of AI how will AI bias be eliminated? developments t Transparency » how will control be maintained? i Interpretability » who will be accountable for decisions f Fairness » made by AI? i Integrity » how will unintended consequences be prevented? c Control »

i Impact » The Institute of Business Ethics has released Accountability » a framework of fundamental values and a principles for the use of AI in business l Learning » (available at ibe.org.uk).

The full IBE briefing can be found at ibe.org.uk AI opportunities and risks 24 Greencoat Place, London SW1P 1BE • t +44 (0) 20 7798 6040 • e [email protected] • www.ibe.org.uk • Charity No. 1084014 for New Zealand

The IoD welcomes the AI Forum’s recently published reports into AI and its opportunities and potential impact on New Zealand’s future (available at aiforum.org.nz). We raised awareness of these issues in our AI call to action paper in 2016 and it’s great to see progress in this area.

All GLC resources and submissions are available on our website iod.org.nz. We will keep members updated on the progress of these legislative and regulatory reforms.

BOARDROOM June/July 2018 BOARDROOM 31 FEATURE

Think outside the square for CPD

Professional development doesn’t have to be onerous. Tapping into what your fellow directors are doing for continuing professional development (CPD) is a good way to get you thinking about the many ways you could meet your CPD requirements.

01: Tom Nickels 02: Kylie Clegg 01 02

nstitute of Directors (IoD) Member and the skills required to respond to see and appreciate the approach taken Kylie Clegg, who sits on the board an attack.” by Tesla in developing EV cars, trucks Iof Auckland Transport and is deputy IoD Chartered Member Tom Nickels, and batteries as well as witnessing their chair of the Waitemata District Health who is Managing Director at Waste pervasive corporate culture, scale of Board, says some of her most beneficial Management New Zealand and sits on investment and application of technology governance learning has come through a number of other boards, also believes was enlightening.” the mentoring she has received from an there is merit in taking a board-wide His approach to CPD is to look for experienced chair. “It’s been invaluable approach to professional development. activities that will expand his thinking and to more fully understand the rationale “The best example that I’ve experienced in help him better appreciate opportunities for why a decision was made, or how to this area was with Transwaste Canterbury, and threats to the companies he is navigate conflicting advice, or the myriad where the board has participated in involved with. Last year he attended the of other governance issues we have a study tour beyond the Australia and World Business Forum in Sydney, which discussed,” Clegg says. New Zealand region. Looking to see had world-leading presenters from the Taking a board-wide approach to new technologies and approaches, this likes of Apple, Wikipedia and Facebook. continuing professional development board visited the USA several years ago “I haven’t taken so many notes since uni,” (CPD) can also be helpful in making sure and then last year it visited China. A he says. all directors are up to speed with evolving deeper level of combined understanding Closer to home, he says IoD’s annual corporate governance issues, Clegg says. is achieved when the board invests in conference three years ago opened his “I have been part of a board exercise a substantial study tour.” eyes to the rapidly rising threat of cyber where directors and senior management Nickels also recently went on a CEO/ crime. “This experience became the undertook a simulated virtual cyber director study tour of the Tesla facilities in catalyst for a review of our status and security attack. It gave directors far Fremont, California, and Reno, Nevada. “At the development of our cyber defence greater insight into the complexities Waste Management we’ve been pursuing roadmap, which we have implemented of dealing with a cyber security attack a strategy of electrifying our fleet and to with vigour.” >>

BOARDROOM June/July 2018 BOARDROOM 32 FEATURE

As well as study tours and conferences, WHAT COUNTS TOWARDS CPD? Level One, Press Hall 80 Willis St Wellington 6011, New Zealand +64 (0)4 894 1856 panel discussions and workshops are also useful [email protected]

Client ways of tapping into fellow directors’ knowledge IoD Members, Chartered Members and IOD Contact Tania Rook and experience. “It’s helpful to hear war stories Chartered Fellows need to build up 60 CPD Project CPD Guide

Execution where things have gone wrong or how different points in what is called their foundation period, A4 booklet Artwork Size ALL YOU NEED TO KNOW ABOUT 210W x 297H mm

Scale boards are analysing emerging issues,” which is three years from the date they join the 100%

Output Size 210W x 297H mm

Clegg says. organisation. After that, they must maintain Date 23 March 2018

Studio Clegg believes that continuing to learn is 60 CPD points on a rolling three-year basis. Victoria

Notes non-negotiable if you want to add value as a Members are responsible for managing and CMYK Continuing director. “Strategy sessions with world-leading upkeeping their CPD points. Professional experts help us as a board challenge our There’s a wide range of activities that Development thinking and be open to opportunities about can count towards CPD points, and they are how to shape the future strategic direction. I’ve not limited to IoD events and courses. All found these experts very willing to share ideas governance activity that you undertake to such as how mobility-as-service and precision keep yourself up to date and improve your 1 IOD0042 CPD Guide FA2.indd 1 29/03/18 3:29 PM driven medicine and different models of care performance in the boardroom counts towards For more information about CPD, can help tackle big transport and health issues.” your professional development. and to see the new guide, go to The IoD has recently released a guide called iod.org.nz/cpd. All you need to know about CPD. It outlines the kinds of activities that count towards your CPD, and also has guidelines on how many points to allocate for different activities.

Examples of point allocation from the updated CPD guide

BOARD DEVELOPMENT

BoardRoom development for your board bringing 2–5 points per presentation in external experts/facilitators

Formal board appraisals and reviews 5 per review

Follow up facilitated session on board appraisal reviews 5 per follow up

Structured board induction 5 per induction 10*

Research on new legislation or a specific regulatory 5 10* change affecting the governance of you organisation

LEARNING EXPERIENCE

Learning experience from extended board activity – Max 10 CPD points per annum completion of a CPD self-reflection

Mentee learning 5 per formal meeting 15*

* maximum CPD points per annum

BOARDROOM June/July 2018 BOARDROOM 33 Drive your governance career. Do the Company Directors Course

You will be learning from the best practising directors to gain a thorough understanding of governance. Join a strong community of driven individuals, and be in a position to lead the way in New Zealand business.

REGISTER NOW iod.org.nz/cdc 0800 846 369

BOARDROOM June/July 2018 BOARDROOM 34

IOD0058 CDC Campaign Boardroom Ad Jo FA.indd 1 9/05/18 11:13 AM KPMG

Reading company ethics from the boardroom

Ethics underpin long-term corporate DISCUSSIONS ON ETHICS are all examples of society placing a value. Falling down on ethical IN THE BOARDROOM higher ethical burden on a wider range practices can very quickly erode your of companies for what happens after the licence to operate. Getting a clear Discussions that actually occur in the point of sale. picture at the boardroom table of boardroom are the most obvious source The tone you set here matters. ethics across complex organisations of information for directors on the ethics A number of those industries have had can be a big challenge. KPMG Partner of an organisation. They’re also at the big gains in engagement of their people Matt Prichard looks at some of the highest risk of being window-dressed and their communities by making a very boardroom signals that might be by those preparing or presenting visible statement at board level. visible of problems down the layers the materials. ‘We’re not doing that anymore’ of the organisation. Nevertheless, our experience is statements can be a huge sigh of relief for that some boardroom discussions staff who have had nagging concerns, and are revealing of ethical issues further raise an audible cheer from communities. down in an organisation. Often that kind of commitment has to For example, board-level policy come first from a strong board challenge. settings can cause an organisation to change direction, for better or CHOOSING AND CHECKING worse, on ethical matters. YOUR CEO A key board-level discussion is the boundaries of the organisation’s More than any other individual, your CEO responsibility for ethical matters. Are influences the ethics of your organisation. you dealing only with matters inside Selecting a CEO is perhaps the board’s the organisation, or do you have a wider most important role. responsibility for ethical dilemmas? CEOs have to bring big brains, and Industries like tobacco, alcohol and the ability to execute on strategy. Those gambling have long faced the awkward things are often evident in CVs and fact that communities hold them testing processes. responsible for the potential harm from How much effort and energy do we put misuse of their products. Responsible in to measuring and assessing whether lending requirements on banks, the CEO’s heart is as big as their brain? waterways and emissions requirements CEOs without the right IQ/EQ balance on agribusinesses, and sugar or other have a high risk of giving poor ethical health considerations for food companies signals to the team around them, or >>

BOARDROOM June/July 2018 BOARDROOM 35 KPMG

missing the signals of ethical issues SAFE TO FAIL? NOT ON ETHICS CHALLENGE FOR in the layers below them. THE BOARDROOM Those same CEOs will be defensive Much emphasis has been placed on to unexpected boardroom questions on the need for it to be ‘safe to fail’ inside Ethical issues don’t tend to be signposted conduct, product impact, or environmental organisations to encourage innovation. as agenda items in our board papers. or community impact, because they have It’s essential that people are Strong boards ferret them out within a narrow focus on the easier to measure encouraged to take risks with product the matters being brought to them, and execute aspects of their role. or process changes that have ‘limited and actively go looking for them in Another signal is how much control blast zones’ – try something, fail fast, the character and behaviour of the they exercise over the content and learn fast, etc. CEO and executive team. presentation of matters to the board. That shouldn’t be confused with Are things reviewed and rewritten by the tolerance for ethical failure. CEO? Are people rehearsed by the CEO? Nothing makes its way around an It’s not unheard of, and it’s not healthy. organisation faster than the outcome where someone has done something THE TEAM AROUND THE CEO that truly crosses the ethical line. Ethical failures that impact on a Even the best CEO, with a clear moral person’s co-workers, or the organisation’s compass and strong ethics can make customers, can’t be tolerated. It’s essential the mistake of surrounding herself with to create an environment where people a team without the strength and diversity call out ethical issues. of views to question and challenge. A CEO who personally dismisses A board which engages with the the person who behaves unethically with broader executive team will have a a customer makes an instant statement sense of that balance and diversity. to the whole organisation. A good CEO without that diversity A CEO who stays uninvolved or agrees faces the risk that the clever people to forgive below-the-line behaviour, either around her deal with serious ethical to protect a valuable high performer challenges without bringing them to or simply to avoid unpleasantness, gains the CEO. an even faster brand, and sets the tone for every layer of leadership within the organisation.

BOARDROOM June/July 2018 BOARDROOM 36 ADVERTORIAL

Health and Safety Act shows its teeth Ryan Clark, NZI’s National Manager, Liability, discusses the importance of insurance cover for statutory liability.

BOARDROOM June/July 2018 BOARDROOM 37 ADVERTORIAL

The complexity and risks The company ended up with a fine Boards have a governance of running a business in of almost $380,000 and had to pay responsibility to ensure a safe workplace, New Zealand’s highly regulated reparation of over $1.1 million. This but they also have a duty to protect its environment are increasing signals a significant change in amounts financial position. They must also provide and I urge businesses to prioritise awarded, but does not include the cost of cover for employees, management and and manage their health and managing the legal defence or the time directors in carrying out their various safety responsibilities. and disruption for staff and management’s functions. involvement in the process. Serious consideration should be given ur experience over the past two Businesses are able to protect by boards on a regular basis in setting years (since the new Health themselves against the cost of reparations and monitoring their risk management Oand Safety Act came into force) and legal defence through statutory policies and frameworks, to create a safe confirms that businesses and individuals liability insurance. If a business holds an working environment and to manage or are now facing greater exposure. appropriate NZI Statutory Liability policy transfer risk. A well-designed insurance Under the new Act, businesses have it can get access to highly experienced programme, put together with the help increased responsibilities, and face stiffer legal teams and the cost of mounting of your insurance advisors, is consequences, and anyone in a position a defence, as well as being covered for an important part of such a risk to exercise significant influence on the reparation payments. Fines, of course, management programme. management of the business is now more cannot be provided for by insurance. At NZI, we are continually seeking likely to be personally liable. It’s now more important than ever to challenge ourselves as to how we can It’s not just limited to the workplace; for businesses to ensure to seek advice best provide insurance solutions that commercial property managers and body on the right insurance protection for support businesses in an ever-changing, corporates are included, and charities, their business, as part of a broad risk- dynamic environment. We want to help volunteer organisations and clubs are management programme. They need to New Zealand’s businesses to make the also affected if they employ one or more consider putting in place an appropriate world a safer place. people. It only takes one employee for the statutory liability insurance solution with organisation to come under the new law. an insurer that has the experience and Fines under the Act are now up to resources to provide meaningful help Fines under the Act are $600,000 for an individual and $3 million when needed. now up to $600,000 for an entity – about six times higher However, insurance is only part of than previously. the solution, and it is even more crucial for an individual and Since the changes it’s become evident that the right steps are taken to prevent that the new Act does indeed have teeth. accidents from happening, and to $3 million for an entity. WorkSafe has been increasing its demonstrate a business’ compliance enforcement activity; in March this with its legal obligations. year there were over 800 enforcement Buying insurance is a means of actions, compared with around 400 in transferring risk, but it does not prevent prior months. As notifiable incidents things going wrong. NZI is encouraging and fatalities remain stubbornly high, businesses to be proactive with their risk WorkSafe is pursuing enforcement more management strategy, including buying aggressively to try and force change. insurance, but also, and more importantly, Prosecutions are becoming more difficult investing in their businesses to create a and complicated to defend, and the safety culture. outcomes less certain. Initiatives such as Safetree, that One company has recently been provides health and safety information for sentenced following the death of a worker the plantation forest industry, are a great in 2016. The worker died while operating example of how industry, business and machinery and WorkSafe prosecuted regulators have worked together to build the company for failing to develop and a safety culture to make sure workers get implement a safe system of work. to go home at the end of the day.

BOARDROOM June/July 2018 BOARDROOM 38 EVENTS Eventsdiary For more information visit iod.org.nz, contact the director development team or contact your local branch manager.

10 Palmerston North June July An audience with August Rob Campbell 26 Auckland 2 Auckland 3 Christchurch Reporting to the board Chairing the board 24 New Plymouth New members lunch – Public Private An opportunity to learn 27 Auckland 3 Auckland Partnerships, discussion more about the IoD Governance Essentials After 5 with Professor with Forsyth Barr director and network with other Ingemar Dierickx Rob Buchanan and members 27 Hamilton New Plymouth mayor Rural Governance 3 Wellington Neil Holdom 9 Christchurch Essentials Integrity and conduct Panel discussion on in the public sector – 25 Wellington Governance and failure, 27 Wellington governance in Transitioning on to with University of Governance CV workshop the fishbowl a New Zealand listed Canterbury Business company board, School’s Associate 28 Auckland 3 Blenheim After 5 with Dame Professor Ekant Veer Finance Essentials A presentation of the Therese Walsh Sheffield Leadership 9 Nelson 28 Whangarei Survey: Leaders under 50 25 Auckland Marlborough branch Next Generation Director Advanced health and networking lunch with evening workshop 3 Hamilton safety governance guest speaker Air New Lunch with Neil Quigley Zealand Chief People 28 Nelson 26 Auckland Officer Jodie King Networking lunch with 4 New Plymouth Digital Essentials Traci Houpapa Finance Essentials 9 Wellington 26 Wellington Chartered Membership 28 Hamilton 5 New Plymouth New member pathway Finance Essentials Reporting to the board welcome event 14 New Plymouth 28 Tauranga 5 Tauranga 26 Rotorua Directors setting the tone Culture and ethics New members dinner Te Arawa Iwi Governance at the top for transparency workshop with IoD Panel Discussion with and accountability, with Chartered Member and 6 Auckland Gina Rangi, Karen Vercoe, Suzanne Snively Tauranga branch chair, Embarking on a Lana Ngawhika and Dr Bev Edlin governance career, Piki Thomas 23 Tauranga director accelerator lunch Bay of Plenty branch 29 Hamilton 31 Auckland Annual Awards Dinner Strategy Essentials 9 Christchurch Governance Essentials with special guest Informing Influencing speaker, Sir Mark 29 Auckland Techniques – part two, 31 Dunedin (and via video Solomon KNZM Breakfast with Hon Grant workshop with Professor to Queenstown and Robertson Ingemar Dierickx Invercargill) 29 Tauranga (and via Zoom An audience to Whakatane) 9-13 Wellington with Kathy Grant Developing and governing Company Directors’ a successful family Course – non-residential business with Allan Scott, Owner and Director of Allan Scott Wines

BOARDROOM June/July 2018 BOARDROOM 39 EVENTS

Branch manager contact details Company Directors’ Course Auckland Otago Southland A fundamental five-day course for directors and Shirley Hastings Vivienne Seaton senior executives with governance experience. P: 021 324 340 P: 021 152 2809 F: 04 499 9488 F: 04 499 9488 August October [email protected] [email protected] 19 Auckland 14 Queenstown 26 Wellington 28 Queenstown Bay of Plenty Taranaki Laura Gaveika Julie Langford September November P: 027 588 8118 P: 021 806 237 2 Auckland 4 Wellington [email protected] [email protected] 16 Queenstown 11 Waiheke Islan 30 Auckland Canterbury Waikato Sharynn Johnson Megan Beveridge P: 03 355 6650 P: 021 358 772 F: 03 355 6850 [email protected] [email protected] Wellington Nelson Marlborough Colin Yonge Karen Goodger P: 021 545 013 P: 027 525 7400 [email protected] [email protected] BRANCH EVENTS For information on member events in your area, see iod.org.nz

Webinars

Live webinars are facilitated by subject matter experts, and themes from your questions and comments are addressed live during the sessions. July 3 Risk Trends; 10.30–11.30am; 2 CPD points Online Learning Any time, anywhere. Offering convenience and flexibility, our self-paced courses provide focused online learning. Progress Integrity and conduct in the public sector – through the course slides, interactive governance in the fishbowl diagrams, videos and reflective exercises at your own pace. Free live webcast Ethical behaviour and a healthy corporate culture are critical Health and safety governance to organisational success and trust in our institutions. Boards 3 CPD points today are under increasing scrutiny from shareholders and other stakeholders to set the tone and ensure ethical behaviour. In the Ethics – how directors do business public sector there can be greater expectations and scrutiny, and 3 CPD points (free until 30 September) boards can feel like they are operating in a fishbowl. The panel will discuss integrity and conduct in the public sector, Directors’ and Officers’ insurance covering a range of topics from workplace harassment and sensitive 2 CPD points expenditure to fraud and whistleblowing. You can attend the event in person at the Wellington Club, or via a live webcast. Not-for-profit fundamentals 3 CPD points July 3 The Wellington Club, Wellington, 5.30pm–7.30pm, webcast from 6.00pm–7.00pm. Cybersecurity 3 CPD points Go to iod.org.nz/what-matters for more details and to register.

BOARDROOM June/July 2018 BOARDROOM 40 OUT AND ABOUT Out & about

Nelson Marlborough It was a full house for the joint IoD and Business Leaders’ Health and Safety Forum panel discussion hosted by 02 the Nelson Marlborough branch in May. The panel included Nelmac chief executive Lee Babe, the forum’s managing director Francois Barton and WorkSafe chief executive Nicole Rosie. The event provided members with useful resources for developing their leadership of health and safety management. Our thanks to Nelmac for sponsoring the event.

03 04

05

01 Auckland Spark’s Managing Director Simon Moutter spoke at a breakfast event on 13 April about Spark’s approach to digital disruption and innovation, using Agile methodologies.

06

BOARDROOM June/July 2018 BOARDROOM 41 OUT AND ABOUT

Blenheim Foodstuffs South Island chief executive and IoD Chartered Fellow Steve Anderson spoke to a Nelson Marlborough IoD branch networking lunch in May about how the South Island’s largest grocery chain successfully managed its way through a series of crippling earthquakes and kept food supplies rolling throughout. His presentation included fascinating footage and key learnings that really resonated with the audience. Grant Rosewarne, chief executive of NZ King Salmon, which sponsors our branch, formally thanked Steve for his talk.

07 08

Otago Southland Joan Withers presented at a lunch event in Queenstown on 30 April about ‘Why governance is better than it has ever been’. Joan delivered a thought-provoking presentation to a very well-attended event.

09 10

01 (From left) Nelmac Chair Robert Gunn 05 Simon Moutter presenting. and Chief Executive Lee Babe, Business Leaders’ Health and Safety Forum 06 Brent Impey introducing Simon Moutter. Managing Director Francois Barton and WorkSafe Chief Executive Nicole Rosie. 07 Hetty van Hale and Carl Carrington. 02 Peter Vial receiving his Chartered Member certificate from IoD 08 Duncan Fea presenting a President Liz Coutts. Chartered Member certificate to Michelle Henderson. 03 Clayton Wakefield, event chair. 09 Duncan Fea presenting a Chartered Fellow certificate to Peter Carnahan 04 John Harvey receiving his Chartered Member certificate from IoD President Liz Coutts. 10 Mark Verbiest, Hetty Van Hale and Joan Withers.

BOARDROOM June/July 2018 BOARDROOM 42 OUT AND ABOUT Out & about

IoD Annual Leadership Conference 2018 We held our annual conference at SKYCITY in 01 Auckland on 10 – 11 April. We had almost 600 attendees listening to a lineup of international and local governance and technology experts.

04

02 03 05

06

01 British economist and 04 CEO and co-founder of author of The Production Conscious Consumers, Ben of Money, Ann Pettifor, Gleisner, spoke about how spoke about financial trade to look at your company’s and globalisation and the purpose and measure economic and political risks its impact. that lie ahead. 05 IoD Chief Executive Kirsten 02 A virtual reality experience Patterson (KP) addresses 07 for delegates. the crowd.

03 Tomicah Tillemann, 06 Venue being set up. Director of Bretton Woods II programme at New 07 Panel discussion on America and founder of the Embracing innovation: Blockchain Trust Accelerator, the board’s perspective, talked about blockchain with (left to right) Tomicah and the effects it will have Tillemann, Peter Bailey, on business models and Melissa Clark-Reynolds, strategies. John Quirk and Dr Helen Anderson. 08 08 CEO and co-founder of Soul Machines, Dr Mark Sagar, spoke about AI innovation Save the date and digital humans. Next year our annual leadership conference will be held on 2 – 3 April at SKYCITY, Auckland.

BOARDROOM June/July 2018 BOARDROOM 43 Level One, Press Hall 80 Willis St Wellington 6011, New Zealand +64 (0)4 894 1856 [email protected]

Client IoD

Contact Andrea Coulston

Project Board Services Collateral

Execution Boardroom Full Page Ad

Artwork Size 210 x 275mm

Scale 100%

Output Size 210 x 275mm

Date 19 June 2018

Studio Carlos

Notes BoardServices CMYK Practical, professional services and advice to help your board.

Call 0800 846 369 iod.org.nz/BoardServices [email protected]

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